TERRITORIAL COURT OF THE VIRGIN ISLANDS, PETITIONER V. JAMES R.
RICHARDS, ET AL.
No. 88-328
In the Supreme Court of the United States
October Term, 1988
On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Third Circuit
Memorandum for the Respondents in Opposition
Petitioner challenges the court of appeals' ruling that the
Inspector General of the Department of the Interior has express
authority under an Act of Congress to conduct an audit of petitioner,
a local court of a United States territory established under Article
IV of the United States Constitution, and that such auditing authority
does not violate the constitutional separation of powers.
1. In January 1987, respondent James R. Richards, who is the
Inspector General of the Department of the Interior, caused a subpoena
to be served on petitioner, the Territorial Court of the Virgin
Islands (Pet. App. 17a). /1/ The subpoena, which was issued in
furtherance of the Inspector General's audit of petitioner, called on
petitioner to produce for examination records that showed how the
court recorded the collection of revenues, accounted for its
expenditures and purchases, recorded and collected fines, managed
escrow accounts where bail monies were deposited, kept control of its
equipment and other assets, and maintained time, attendance, and
payroll records (id. at 16a-17a). Petitioner's records had on several
prior occasions been included in audits by the Inspector General (id.
at 19a), and petitioner's predecessor court, the Municipal Court of
the Virgin Islands, had also been audited by the Department of the
Interior (id. at 30a-31a & n.9).
Petitioner filed a complaint in the District Court of the Virgin
Islands seeking declaratory and injunctive relief against the subpoena
and any audit. Respondents counterclaimed for enforcement of the
subpoena and shortly thereafter moved for summary enforcement. In
support of the motion for enforcement, respondents established that
the subpoena meets the three-pronged test applicable to subpoenas like
the one at issue. See, e.g., United States v. Powell, 379 U.S. 48,
57-58 (1964); United States v. Morton Salt Co., 338 U.S. 632, 652
(1950); Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186,
208-209 (1946); see also United States v. Westinghouse Electric
Corp., 788 F.2d 164, 166 (3d Cir. 1986) (test applied to Inspector
General subpoenas). In particular, respondents showed, and the
district court concluded (Pet. App. 26a-32a), that the subpoena is
authorized by the Insular Areas Act of 1982, which requires the
Inspector General to maintain a "satisfactory level of independent
audit oversight" of the accounts of the government of the Virgin
Islands and provides that "(t)he authority granted * * * shall extend
to all activities of the government of the Virgin Islands, and shall
be in addition to the authority conferred * * * by the Inspector
General Act of 1978." 48 U.S.C. 1599. The Inspector General Act of
1978 in turn authorizes the use of a subpoena to fulfill the Inspector
General's responsibilities. 5 U.S.C. App. 6(a)(4). /2/
2. The court of appeals, like the district court, rejected
petitioner's contention that only the Administrative Office of the
United States Courts, and not the Inspector General of the Department
of the Interior, is statutorily authorized to audit the Territorial
Court (Pet. App. 3a-6a). The court first held, contrary to
petitioner's suggestion, that the Inspector General's statutory
authority to audit "all activities of the government of the Virgin
Islands" (48 U.S.C. 1599) is not limited to activities of the
executive departments of the Virgin Islands government. The court
noted "the breadth of the language employed in the statute and the
lack of any valid reason" why Congress would choose to exclude the
Virgin Islands judiciary or legislature from federal audit scrutiny
(Pet. App. 6a). The court of appeals similarly rejected petitioner's
contention that the "except" clause of 48 U.S.C. 1544 establishes that
only the Administrative Office of the United States Courts is
authorized to audit the Territorial Court. That section places in the
Secretary of the Interior responsibility for all Virgin Island
government matters "except matters relating to the judicial branch of
said government which on July 22, 1954 are under the supervision of
the Director of the Administrative Office of the United States
Courts." The court of appeals explained (Pet. App. 7a) that the
"except" clause does not apply to petitioner, because the Territorial
Court was not under the supervision of the Administrative Office on
July 22, 1954, and indeed, has never been under that Office's
supervision. Thus, insofar as the Virgin Islands are concerned, the
Administrative Office's authority, which is set forth in 28 U.S.C.
604(a)(11), 610, extends only to the District Court of the Virgin
Islands.
The court of appeals also rejected petitioner's argument that an
audit of the Territorial Court by an executive agency violates the
constitutional doctrine of separation of powers (Pet. App. 7a-8a).
Congress established the present Virgin Islands government in the
exercise of its power under the Constitution (U.S. Const. Art. IV,
Section 3, Cl. 2) to "make all needful Rules and Regulations
respecting the Territory or other Property belonging to the United
States." The court of appeals "(a)ssum(ed), without deciding, that
separation of powers principles may be viable as among the branches of
the territorial government" (Pet. App. 8a). But the court of appeals
concluded, following the district court (id. at 24a-26a), that such
principles do not constrain Congress in its authority to legislate for
the territories (id. at 8a).
3. The decision of the court of appeals does not conflict with any
decision of this Court or of any other court of appeals. Nor does the
decision raise any question of general importance. Indeed, the Third
Circuit and the District Court of the Virgin Islands are uniquely
positioned to speak authoritatively on questions peculiar to the
Virgin Islands. In this case, moreover, the concurrent judgment of
both lower courts is correct and does not warrant further review.
The Inspector General has express statutory authority under 48
U.S.C. 1599 to audit "all activities of the (Territorial) government."
As the court of appeals explained (Pet. App. 6a), that language does
not contain an exception for the judicial (or legislative) branch of
the territorial government. /3/ Cf. United States v. Providence
Journal Co., No. 87-65 (May 2, 1988) (phrase "United States" in 28
U.S.C. 518(a) is not restricted to Executive Branch). Nor, as the
court of appeals also noted (Pet. App. 6a), is there anything about
the function of auditing -- or the prospect of the Inspector General's
auditing the Territorial Court -- that would suggest that Congress
must have intended a narrower meaning than the broad statutory
language suggests. In fact, as the district court explained (id. at
29a), the practice of the Inspector General's predecessor had been to
audit the local territorial court, and Congress presumably acted with
knowledge of existing audit practices when it transferred the auditing
authority, without limitation or alteration, to the Inspector General
in 1982.
The statutes relevant to the Administrative Office's powers offer
no more support for petitioner's contention. Thus, as the court of
appeals noted (Pet. App. 7a), Sections 604(a)(11) and 610 of Title 28,
U.S.C., expressly authorize the Administrative Office to audit the
District Court of the Virgin Islands; they do not mention the local
Territorial Court. And the "except" clause of 48 U.S.C. 1544 does not
take petitioner outside the jurisdiction of the Secretary of the
Interior, because petitioner was not in 1954, and has never been,
under the supervision of the Administrative Office (Pet. App. 7a).
Indeed, whereas the Inspector General and his predecessor (the
government controller) have regularly asserted authority to audit the
local Territorial Court, the Administrative Office has never asserted
such authority (Pet. 17 n.19).
The lower courts were also correct in rejecting petitioner's
constitutional claim that the audit proposed is inconsistent with the
separation of powers. The doctrine of separation of powers concerns
the relations between the co-equal branches of the national
government, branches that are established directly by the Constitution
and not by Congress. The doctrine has no application -- and
petitioner does not show that it has ever been applied -- to restrict
Congress's power to define the "vertical" relationship between the
national government and a territorial government, the latter of which
is created not by the Constitution but by Congress pursuant to its
plenary territorial-legislation power (U.S. Const. Art. IV, Section 3,
Cl. 2). The Territorial Court here is not an Article III court (see
American Insurance Co. v. Canter, 26 U.S. (1 Pet.) 511, 546 (1828);
United States v. Canel, 708 F.2d 894, 896 (3d Cir.), cert. denied, 464
U.S. 852 (1983); United States v. George, 625 F.2d 1081, 1089 (3d
Cir. 1980); Government of Virgin Islands v. Bell, 392 F.2d 207, 209
(3d Cir. 1968)) and so is not part of one of the three co-equal
branches of the national government to which the separation of powers
doctrine applies. In any event, an audit such as is proposed in this
case does not seriously threaten the judicial functions and
independence that the separation of powers doctrine protects. The
court of appeals concluded that the Territorial Court made no showing
that the audit would be impermissibly intrusive or that it would even
be burdensome (Pet. App. 10a), and the district court specifically
noted that it would be "hard pressed to find here the potential for
disruption" of the court's business (id. at 26a). /4/
It is therefore respectfully submitted that the petition for a writ
of certiorari should be denied.
CHARLES FRIED
Solicitor General
OCTOBER 1988
/1/ The subpoena was served by Neal Littlefield, the other named
respondent in this case, who was the Caribbean regional audit manager
for the Inspector General at the time. See Pet. App. 16a.
/2/ With respect to the second and third prongs of the test laid
down in Powell and Westinghouse, respondents demonstrated the
relevancy of the documents sought and the steps taken to avoid any
undue burden on petitioner. Petitioner presented no evidence
suggesting that the subpoena might be burdensome or that the documents
sought were not relevant (Pet. App. 9a-10a). The district court (id.
at 32a) and the court of appeals (id. at 9a-10a) found that
respondents had satisfied those requirements, which are not at issue
in this Court.
/3/ Petitioner suggests (Pet. 10) that the "common sense" reading
of the phrase, "government of the Virgin Islands," would construe it
to refer only to the executive branch. But that view is contradicted
by the language of the Revised Organic Act as a whole. For example,
Congress provided that the "government of the Virgin Islands shall
have the powers set forth in this chapter" and then enumerated powers
that are obviously legislative or judicial in nature. 48 U.S.C. 1541.
See also Pet. App. 30a.
/4/ Petitioner suggests (Pet. 24-27) that the Court hold the
present petition pending resolution of Barnard v. Thorstenn, No.
87-1939, and Virgin Island Bar Ass'n v. Thorstenn, No. 87-2008,
because the Court may in those cases address the relationship between
the Territorial Court and the District Court of the Virgin Islands.
But the question presented in those cases concerns the validity of a
local residency requirement for the practice of law and has no bearing
on the question presented by petitioner. Whatever the result in the
Thorstenn cases, and whatever discussion there might be in those cases
of the relation between the District Court and Territorial Court, the
court of appeals' ruling rejecting petitioner's statutory and
constitutional challenges to the Inspector General's auditing
authority would remain correct. Accordingly, the present petition
should not be held pending resolution of the Thorstenn cases.